> Fifteen months into the regulatory review process, Figma and Adobe no longer see a path toward regulatory approval
How in the world did it take fifteen months for regulators to reject this? That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.
I don’t have an opinion on whether or not the merger should be approved, but regulators need to make up their minds quicker or else you can expect a serious chilling effect on M&A. Can you imagine agreeing to get acquired knowing that it can take up to 2 years to close? Anyone operating a real business would be crazy to sign on for the distraction.
I would argue that the regulators made their point pretty clear early on when the DOJ opened a lawsuit against Adobe. The people most responsible for keeping this in limbo were Adobe’s lawyers.
I'll admit when I'm wrong. The DOJ announced back in February that it was "preparing to sue", but appears to have never officially filed that lawsuit. My mistake.
Nonetheless, I think my point still stands in that the FTC and DOJ made how they felt about the deal pretty clear.
Your comments are straight up factually misrepresenting what happened. There were plenty of news reports early this year that DoJ was preparing to file suit against the merger. I guarantee they were in close contact with Adobe's lawyers, and the normal process here is that Adobe's lawyers/execs come back and say "hold up, let's see if we can make a deal" - that's essentially what happens in the vast majority of lawsuits.
Adobe (and Figma) knew full well this deal wasn't a slam dunk from the beginning.
Threatening a lawsuit is better than nothing but it definitely didn't lead to a quick resolution. At a certain point the answer to whether they can make a deal needs to be "no", not "we'll wait".
You’ve posted this about me twice. I haven’t shown any ire and I think it’s counter to the spirit of hacker news to suggest bad faith in my posts based on my proximity to the topic.
Have you mentioned at all in this thread where you are vociferously and borderline disingenuously defending your employer that you are in fact a figma employee?
Speaking for myself and not for Figma and I wouldn’t want to muddy that fact or imply that I have meaningful non-public information. I don’t think anything I’ve said is either vociferous or disingenuous.
I actually haven’t even said whether or not I agree with the decision or whether or not I think the timeline is reasonable (in the sense of whether the benefits and needs of the timeline justify the cost of it), so that doesn’t seem vociferous to me.
If I was being disingenuous I’d post on a throwaway, not an account that you can trivially connect to my identity.
This deal already has fallen through. What I type here has no possible impact. So idk what the motive here really is.
I have a bunch of different feelings about it of course, but I think what I have said here has been factual and verifiable against public information.
One of the things I’ve always enjoyed about hacker news is that it isn’t purely a peanut gallery and people involved in the companies and technologies we talk about do post here. Attributing bad faith to those people when they do participate seems antithetical to the spirit of this place.
The Broadcom & VMware merger took similarly long and was approved. The duration is completely unacceptable and poison to business. I'm general against mergers and think it's better for consumers and the market if competitors fight to the (metaphorical) death instead, but if we do something, let's do it smoothly and right.
That said, for mergers like that a ton of countries are involved which makes things even more complicated and makes it harder to point out where we need to make things smoother.
> Broadcom & VMware merger took similarly long and was approved. The duration is completely unacceptable and poison to business
The number of such mergers, globally every year, is countable on two hands. They involve the wealth of nations (this one’s similar to Malta’s GDP [1][2]).
It would be unreasonable to permanently staff the regulatory force that would be required to quickly review such deals in any industry.
Do they though? People often compare rich people or companies to a country GDP's, but GDP is based on a single year. The size of a company's bank account is not. A year is pretty arbitrary. In some sense it's like saying the distance between New York and Washington is 200 miles which is not that long, because a Ferrari's top speed is 200 mph.
> it's like saying the distance between New York and Washington is 200 miles which is not that long, because a Ferrari's top speed is 200 mph
It’s saying the distance is within a class negotiable by a Ferrari.
In the GDP to value case, we’re saying that the consideration at hand is comparable to all of the work of a small country for a year. So the care the latter gets is in the same class as the care the former should receive.
I don't understand. If there are several per year, and they're going to take a couple months even at maximum speed, then permanently staffing the regulatory force sounds very reasonable to me! (For the US and EU which are going to weigh in on a big fraction.)
Why would you want to be hiring and firing constantly?
> permanently staffing the regulatory force sounds very reasonable
There are permanent staff. There are also legions of industry experts contracted on a case by case basis. Full staff on standby would mean having, on retainer, experts in every industry where a merger might happen.
There are permanent staff. The issue of time isn't any individual regulator - it's that there's regulators in every country they operate in. And the company is negotiating with them all simultaneously - figuring out what would make the EU say yes, and then taking that to the US and see if that will let them say yes, then going to Japan and making sure they'll say yes, then going to India - and you don't want some of them knowing that everyone else has already said yes, because then they'll hold out to get some last special thing.
These are complicated negotiations, in many complicated jurisdictions.
How quick do you think they should be? For everyone to understand the potential ramifications and consult appropriate industry experts? Let competitors et al file briefs?
Once they get working on it, I would think they could get consultation and competitor briefs back within a month. Then have an initial answer within two months of the announcement, and if that answer is a "no" they'd have a good idea of what would need to be changed.
And I don't see a great reason that negotiations should more than triple that amount of time. If they're not budging, make the "no" final. So two months initial, six months max, would be good numbers.
If the company wants to negotiate with everyone in serial... that's their problem.
> and you don't want some of them knowing that everyone else has already said yes, because then they'll hold out to get some last special thing
Wasn't the thesis of this comment line that government regulators are being slow or being a problem? This supports that idea, I think.
I don't know anything about the Adobe / Figma situation, but "If you just don't question the government they won't make your life so hard" doesn't seem like a very strong response to accusations of overreach.
Your completely correct if you mean the norm since the 80's when antitrust enforcement was abandoned. Her stances completely align with the standing anti-laws and regulations that have existed for over 80 years. The anti-trust bar and big business have been trying to redefine what anti-trust is for the past 30-40 years which is what got us into this mess of giant firms and too big to fail economics.
The perspective that bringing back regulatory action is outside the norm shows just how skewed economic thinking has been in the US.
It's not just "regulatory action" that the FTC under Khan is embarking on - it's outright hostility and refusal to even work with companies she personally doesn't like.
There is a difference between enforcing laws and then just trying to burn down everything you touch. Khan is embarking on the latter quest (see the way she tried to handle the Within Unlimited acquisition.)
It would be different if the FTC actually attempted to engage in good faith. As someone that has seen them in action recently, they do not.
I agree there. We seem to be recovering from a cycle of not caring about monopolies at all, and corporations are now as strong as they were in the late 19th century. I am not surprised that anti-trust is slow and unpredictable today. I hope that we settle into a more predictable regime, no matter which political party is in power.
For historical references, anti-trust filings began against Standard Oil in 1906, and it was broken up in 1911. [0]
The AT&T breakup took four years, from 1978 to 1982. [1]
When the powers that be decide to block a merger, they have to make the case. There's looking at the proposed merger and being able to say "this is bad and may be antitrust," and then there's actually making the case when it comes down to it. That takes time. And you can expect companies like Adobe to fight rather than just saying "oh, you don't like this? OK. We'll withdraw."
The DOJ and other bodies voiced opposition early on. They signaled quickly that they were not in favor of this. The interim between those actions and today were the regulatory bodies actively making cases against it and/or negotiating with Adobe & Figma how they could proceed in a way that the regulatory bodies would want to approve of the deal.
The whole idea that this was "half-assed" in some way is misguided.
Note that I worked for Red Hat while IBM was acquiring it. It took from (IIRC) October 2018 to July 2019 without strong opposition. When you're talking about companies that have that much impact on a market, it takes a while.
And it should -- the larger market doesn't benefit from waking up to find out that a major software supplier has been gobbled up overnight. You can see the pain that VMware employees + customers are going through right now and they've had a lot of time to process the idea.
> it's better for consumers and the market if competitors fight to the (metaphorical) death instead
I never understand why this is the only other option. If you're in a town and open a coffee shop, and someone else opens a coffee shop, if the town is big enough, you can both thrive. You don't have to try to take out the competition. But every big corporation decides it's the only option.
VMW-AVGO was held up by the Chinese and South Korean regulators - it gets geopolitical. sure would be nice if everything was clear and clean for businesses but also it would be nice if I had a pony and magic shoes.
> That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.
Your understanding here is fundamentally wrong. Regulators in the US said very early on they were against this merger and were going to fight it. So most of what goes on in the meantime is Adobe and Figma (a) seeing if they can give something up to appease regulators (e.g. it's common for regulators to only sign off on a deal if one of the companies sells off some assets) or (b) decide if they're going to fight the regulators in court.
Your idea of the regulators just "dragging their feet" is incorrect
The regulators moved fast. I had detailed conversations with regulators about this merger weeks after it was filed. They moved extremely quickly to signal that they were going to block it.
This is a really inaccurate factual understanding of the sequence of events here: I would urge you to look at the actual timeline of events around the CMA and the DOJ before you keep spreading it.
The idea, proposed by the comment I was responding to, that regulators were just twiddling their thumbs and then only gave a thumbs down to Adobe after 15 months is wrong and completely misunderstands how the regulatory process for merger approval works.
It also said the lawsuit would be filed “in February or March”, but it was never actually filed, so what factual relevance do you think that article really has? Moreover, the DOJ wins less than one in three of these kinds of cases: the US system is an adversarial one where the courts decide so it makes no sense to immediately abandon in the face of DOJ opposition.
What is also true is that the uk finished its phase 1 review (where they decide to send it for further phase 2 review) in June, so 9 months after the deal was announced. Phase 2 leads to changes in about 50% of deals. The phase 2 deadline was late February 2024, about 18 months later.
I don't think any of this is indicative of anyone sitting on their hands or twiddling their thumbs, but it’s clearly a slow process and that uncertainty clearly isn’t good for the parties involved.
That's a little over a month after the announcement was made. That is "very early on" in the 15 month "sequence of events."
Keep in mind, this was the announcements. FTA: "The DOJ has been contacting customers and competitors of Adobe and Figma, as well as Figma’s venture capital investors, in recent weeks, the people said. According to one of the people, the DOJ has already issued civil investigative demands — information requests similar to subpoenas — an unusual move at this early juncture in the probe."
So, we are talking about significant action being taken less than a month after the announcement.
I'll grant you "very early on" is subjective, but I feel any reasonable person would say that this constitutes "very early on".
In short, I would urge you to look at the actual timeline of events around the CMA and the DOJ before you keep spreading an inaccurate factual understanding of the sequence of events here.
It seems wrong/illegal that they can just "decide they're against the merger" and sink it by dragging their feet. Its either legal or not. I haven't dug into the details, but based on this one line alone it sounds like this is abuse of power.
They literally indicated they were against it from early on, but Adobe tried to brute force it through and after careful review they said, “still no.”
Also, it’s not as if Figma has been sitting around all this time waiting for their dear Adobe to close. My understanding is that more than 500 new people have been hired since the deal was announced (total is now like 1300+) and growth continues.
I’m just glad Figma can now move on without having to do some “roadmap alignment exercise” or doing the “gradually falling apart” that so many Adobe acquisitions have done.
The real thought should be why Adobe was willing to pay twice the recent valuation to take Figma out as a competitor, and why only European regulators had a problem with it. They have a tendency to kneecap anyone who’s a substantive threat to their market, and we need viable competition in the space.
It may not have been particularly timely in terms of review, but it was never inconsistent. And we have no idea what kinds of delays were put on the deal, including delays from the Figma and Adobe teams.
Another way to say "decide they're against the merger" is "evaluate the situation and make a timely ruling that they oppose the merger as illegal."
Which is exactly what they were supposed to do. Adobe and Figma tried to argue with the regulators or find a compromise, but couldn't come up with a solution that satisfied all parties.
If you try to extract subtle implications from the phrasing of a commenter on HN, you're likely to jump to the wrong conclusion.
But that's the point: it's not timely. It's a massive millstone to Figma, who now have to figure out what to do with their pixel-perfect UI designer collaboration tool in a world of an and coming Adobe Firefly.
It seems they are saying the merger as is will be illegal, however they give both companies some time to do something that will make the deal work. 15 months is a short time if you have to sell enterprise assets or let competition emerge to show the merger isn’t a danger to the market.
If companies want a fast answer they can ask for one and it will be no.
All said I do not worry about if billion dollar companies are being fairly treated. They have the capital and expertise to protect their own interests and it’s not worth it to preemptively fight on their behalf.
Perhaps I should introduce you to the legal system? Adobe proposes the merger, DoJ says they will sue to stop it. At that point, if the parties can't come to an agreement, it goes to the courts.
I think it's fine to argue our legal system is too slow, but again, this idea that regulators are just "dragging their feet" to slow things down is fundamentally incorrect. Regulators announced quite quickly they would fight this deal.
Welcome to the world of antitrust, where almost everything is in a grey area and vibes-based. Never seen anyone who studied this area (and who didn't already work for a related Federal agency) who didn't conclude that this was a big mess, no matter their opinions on how it should work.
we have no idea when they filed what papers where ... and when regulators answered and what, and then how the companies reacted, and when, and ...
on the announcement, Sep 15, Adobe stock fell by 17%. the FTC opened some investigation on Nov 2. some EU thing started its process in February (based on filings by refering countries, and of course we have no idea of the details of those country-level processes)
so, all in all, it's likely that relevant authorities quite soon signaled that Adobe-Figma is facing an uphill battle, and now, as they announced, they backed down.
we have no idea of the negotiations, who was fast or not, who recommended what, asked for what guarantees, and so on.
> How in the world did it take fifteen months for regulators to reject this?
They didn't. They started seriously investigating it less than a month after the announcement and publicly shared this information just over a month later.
> but regulators need to make up their minds quicker
They did. Adobe and Figma were trying to appease regulators by figuring out if there was a way to handle their concerns. They aren't willing to divest themselves enough from their existing portfolio or offer concessions.
If you want them to make up their minds quicker, then the default answer should be No. With weeks not even being an acceptable time frame for action, anything other than No is harmful.
It is not a simple yes/no response from the regulators. First, they will request additional information. That will take some time to prepare. Then they would offer some changes to the proposal. I.e. we cannot approve this deal until some additional requirements are met. Then parties involved evaluate these requirements and counter. At some point business will decide that there are too many constraints and abandon the deal.
The DOJ already signaled it wanted to block this on antitrust grounds almost a year ago. If "regulators" had immediately rejected the deal, there'd be a similar "oh, this will have a chilling effect" complaint because they slapped it down without adequate due diligence.
This is one M&A deal out of many. The vast majority -- even some that shouldn't be approved IMO -- sail through or squeak through due to persistence. I just can't find it within myself to feel bad for Adobe in this, since the most likely outcome was to just solidify Adobe's grip on the market and reduce competition. I know quite a few people who use Figma who were absolutely dreading this merger.
Not a good thing when it's taken to absurd lengths. See Lina Khan's attempt to block the Within Unlimited acquisition. The problem with the current administration is that there's no good-faith path forwards to get anything done. If you have worked with the FTC recently you'd understand what a hostile clusterfuck it is.
you should really link to something about it that your specifying. Cause it really looks simiar to blocking Microsoft from buying Activision.. A company that makes the hardware trying to buy up all the independant software vendors and have them only make software for their hardware is getting really, really old. I think the only people that would complain are the ones who would directly benefit.
I want it to be taken to absurd lengths. If and/or when the negative ramifications of discouraging mergers/acquisitions even begin to approach the damage that encouraging them has done to our economy and society, and only then, we can consider slowly reducing the pressure against.
Seems like regulators didn’t reject it, but tarpitted it?
And with market conditions having changed so much in 15 months, this could just as easily be buyer/sellers remorse before the deal actually closes. For a 15+ month closing, it wouldn’t be the first time!
Actually completing mergers/buyouts takes years anyway.
> How in the world did it take fifteen months for regulators to reject this?
Presumably regulators in a few countries were interested, each with their own processes, and presumably there's some fairly significant back and forth between the regulators and adobe/figma as adobe/figma tried to convince the regulators that the deal should go ahead.
15 months seems very believable for a deal of this size.
> How in the world did it take fifteen months for regulators to reject this?
I agree with your overall point that the current regulatory process related to anti-trust M&A very much needs to be improved. While the delay may be the proximate cause, focusing on that risks failing to address the fundamental root cause of the problem, which is A) lack of clarity in regulatory policies and the underlying laws authorizing them, and B) their inconsistent application across different industry contexts and between different international jurisdictions.
The lack of clarity can be improved by regulators adopting clearer public guidelines about how they will interpret and apply the rules (and then establish credibility by actually sticking with those guidelines over time). Improving consistency across jurisdictions is more challenging but still possible if regulators in the largest domains (US and EU) collaborate to harmonize their policies (as is done in many other regulatory contexts).
Recently, Lina Khan in the US has made this problem far worse by aggressively pursuing quite extreme interpretations of anti-trust law, and worse, doing so without establishing any corresponding framework or justification. As a result, this bungling has caused her agency to lose several high-profile cases. So far, much of this bungling seems to be "just for show" (ie political posturing) since it's not working.
Unfortunately, it also has the effect of nerfing the market for entrepreneurial exits via acquisition. While it's true that acquisitions large enough to attract anti-trust scrutiny are outliers, much of the money invested in earlier stage startups (which drives most new job creation in the US), is justified by average returns substantially propped up by a few such >100x acquisitions. Half the extreme high-end outliers being lopped off by regulatory uncertainty around large acquisitions is one reason capital for new business creation and growth is getting scarcer and more expensive. The point being, this matters to our industry and jobs.
I was referring not to just valley tech startups but investing in new small businesses overall. Per the U.S. Gov Small Business Administration:
> "Despite the jobs lost during the recession, large businesses generated 6.7 million net new jobs over the past 25 years. During the same period, small businesses generated 12.9 million net new jobs, meaning small businesses have accounted for 66 percent of employment growth over the last 25 years."
> "18% of small businesses fail within their first year, while 50% fail after five years and approximately 65% by their tenth year in business. This information is as per the Bureau of Labor Statistics."
Combined with the long-term (25-year) data I cited further above, this indicates the majority of small businesses are started up recently. The pool of small companies is constantly turning over and refilling with new startups - of which the vast majority die in less than ten years and a very few grow to be large companies (thus no longer counted in the pool). By definition, the shape of the small business pool must be a very slender, very long curve when graphed by employee count.
I think the tech community has perhaps a different set of connotations associated with the term "startup" than the non-tech, non-valley populace. The vast majority of startups (ie small companies started in the past five years) aren't technology companies and aren't fast growth. Yet there are so many of them, they comprise two-thirds of new job creation. Even better, many of these newly created jobs are entry-level, don't require advanced degrees or rare skills and don't require relocation to costly and crowded urban centers.
I think this misconception of small businesses is pretty common in the high tech community. Before I was a tech entrepreneur in the valley, I started out as a non-tech entrepreneur far from the valley. Then I was a tech entrepreneur far from the valley, in a mid-western U.S. state. Despite being in the fairly large state capital, the largest regional newspaper wrote a story about "Tech Companies Here in the Capitol", citing my software startup and the local Radio Shack store as the only two :-). Yet the local Chamber of Commerce, Small Business Administration and entrepreneurship clubs were overflowing with pre-launch and just launched new startups ranging from a new kind of farm animal feed distributor to sandwich shops to (non-franchise) local restaurants to karate studios. Together these small businesses employed thousands of people in a city whose population could probably all fit within a few square blocks of NYC.
I also want to point out, the organic, diverse, self-renewing nature of small business reality outside the tech, valley, urban bubbles is incredibly encouraging. As much as I love tech (and how rewarding it's been for me personally), I'm thankful the fickle, boom/bust, incestuous nature of high-tech startups is statistically the rare exception of new companies being started which drive new job creation.
Well, I'd just call those new businesses, but dictionaries agree with you. I was using Paul Graham's definition of "startup", which is something more specific: http://paulgraham.com/growth.html. That's about growth, not tech, so feed distributors could qualify.
Keep in mind that you are reading a corporate press release/propaganda piece, not journalism. It is going to be inherently one sided and will not tell the whole truth. Never take these kinds of statements at face value.
The current administration has made it very clear they will block nearly all attempts at mergers and if they can't block it will drag the process out as long as possible to make it as unappealing as possible.
I'm going to guess regulators are plenty busy with a long list of things to do. When the acquisition gets announced it gets added to the list and they make their way to it.
I really doubt regulators are dragging their feet. They are most likely understaffed and overworked. Things this big should take time for all sides.
How in the world did it take fifteen months for regulators to reject this? That’s an absurdly long time to be operating a business in limbo, and I have to assume it’s the regulators dragging their feet since the companies have every incentive to move quickly.
I don’t have an opinion on whether or not the merger should be approved, but regulators need to make up their minds quicker or else you can expect a serious chilling effect on M&A. Can you imagine agreeing to get acquired knowing that it can take up to 2 years to close? Anyone operating a real business would be crazy to sign on for the distraction.